O.T. Peak Oil...***?

[Dekonick]

OK - lets hear what the braniacs can say about this:

http://www.lifeaftertheoilcrash.net/Index.html

Kinda frightening if what is reported is true. Y2K all over or is this a real concern?

I am gonna start buying innertubes and tires! :D

[Louis]

I’m sure the quantity of easily accessible oil will eventually be dramatically lower than what we now have. However, since there is so much money to be had in the commodities futures business, I assume that those guys have it all figured out. If we were about to run out any time soon the futures prices would show that. These days the prices seem to be primarily affected by political instabilities, one-time events such a Katrina or 9-11, and gradually increasing demand, not by a concern that we’re about to run out.

I don’t loose any sleep over this, but I do drive a car that gets over 35 mpg (Acura Integra). I’m guessing that in the next ten years we will be seeing $5 / gallon gas for at least part of the time, and my next car will also get very good gas mileage.

Caveat: I’m not an economist or a commodities trader, and I certainly don't consider myself a brainiac...

Louis

[BdaGhisallo]

Quite simply, the world will never, and I do mean never, run out of oil. No matter how much we actually have left to use, the price mechanism will ensure that the very last barrels will never get used. As the real supply dwindles toward zero, the price of that oil will skyrocket so hugely that it will not be economic to use it for any real purpose. Alternative energy supplies will have been developed so that we never have a situation whereby we consume all the oil and then the next day we stop dead in our economic tracks for lack of energy. Oil will cease to be a major energy supply long before it nears extinction - and that will be many years off, and a lot longer than the proponents of peak oil say. For instance, the oil shale deposits under Colorado and other western states hold an inventory of oil many times bigger than Saudi Arabia's proven reserves.

We humans are smart animals and we will figure it out. Never underestimate the ingenuity of the human species.

[cydewaze]

As the real supply dwindles toward zero, the price of that oil will skyrocket so hugely that it will not be economic to use it for any real purpose.
And the longer we delay the switch to alternative energy sources, the worse that final price jump is going to hurt.

[Ray]

I think we've had this discussion here a number of times. Nobody predicts that we're about to run out of oil. Only that we have hit / are hitting / will soon hit the peak of global oil production and production amounts have started or soon will start going down. Which, in combination with rapidly increasing demand (at least, so far - I understand the market plays a big role in this) means that prices will start increasing to very very high levels much more rapidly than anything we've yet seen. Which will create even more global competition (both economic competition and military competition) for an increasingly scarce and increasingly critical resource.

The question is just how rapid and dislocating this transition will be and how well we'll handle it as a global society. And whether there are other sources of energy that will, after a period of transition, allow us to live in as energy consumptive a way as we have. Or whether we're collectively going to have to adjust to a much much lower standard of living.

Some predict a pretty severe crash. Some predict a gradual transition. I *HOPE* its a gradual transition, but I wouldn't bet the ranch, although I guess in a sense we ARE betting the ranch, because we don't seem to be reacting to already increasing oil prices by doing anything other than maintaining high consumption levels.

-Ray

[Serpico]

.
despite the title it's a very even-handed treatment of the subject. there's a lot of books out there based on doomsayin' and hyperbole (ie Kunstler, etc), not this one.

it's quoted quite often by other books and journalists. it's very "fair and balanced" ;) and just presents the facts without pushing an agenda.
.

[Simon Q]

We humans are smart animals and we will figure it out. Never underestimate the ingenuity of the human species.[/QUOTE]

If we are so smart why do 2/3 of the world live in poverty while the rest of us live it up? Why are we destroying the planet in the name of economic growth? Why do we kill each other over differences in ideology?

Human intellect never ceases to amaze but truly intelligent beings would have it all sorted out much more than we do. Greed and arroagnce are emotions that we are unique in having amongst the animal kingdom and that is why we see and hear what we want to. Running out of oil or having it be become like liquid gold without a fundamental shift in the way we live will be catastophic. Will your food be able to come from another state or country? Look around the room you are in or the computer you are on and think about all the things made from oil. Yes, lots. This is real, of course it is a finite resource just a matter of when, and it's not just a matter of finding another way to get to work. Financial markets get it wrong (heaps) and do you really trust politicians (who think only 3-4 years out at the most) and oil companies to tell or unearth the truth? Please.

Not wanting to bring things down but if we could get over ourselves as a species we could maybe start addressing the outcomes of some of our flaws. Might be a little heavy for this forum but it is a heavy thread and that comment was in my view symptomatic of the greatest issue facing this planet: us.

[stevep]

im not worried about it. i just filled my gas tank.
s

[catulle]

I run on patchouli and olive oil, atmo.

[1centaur]

The only question is the cost of the transition, not the reality of it. We have not switched to alternative sources because they are far more expensive/less efficient in the near term. If politicians get on their alternatives high horse (solely because they think they can get more votes that way of course), we might get alternatives a little sooner and pay too high a dollar price for that mis-timed transition. If horrible oligoplistic oil companies really ruled the world, we'd get the transition too late. But capitalists, to the extent they are alowed to seek maximum profit, have increasing incentives to make alternatives more efficient and will try too early as well as at the right time. They will succeed, if they aren't bogged down by regulations or taxes.

I suspect the meaningful crossover point will not be for more than 10 years, given the infrastructure going into the oil sands and the suspect ethanol push. So we can be the humans that we are indefinitely, not the humans that some would like us to be.

[stevep]

But capitalists, to the extent they are alowed to seek maximum profit, have increasing incentives to make alternatives more efficient and will try too early as well as at the right time. They will succeed, if they aren't bogged down by regulations or taxes.
.

a free market guy.
but usually capitalists do their level best to try to block alternatives and justify higher short term profits in the immediate future ( see GM, Ford, Chrylser )... not much looking into the more distant future...and they also frequently do their level best to legislate and outlaw alternative products...( see the drug companies lobbying- paying off - congress to write a massive drug law that forbids the worlds largest drug purchaser from leveraging prices...or you could play the enron tapes during the california energy situation..the whole thing sold as a free market solution, dont worry, the market will take care of it.. ).
the trouble with free markets, centaur, is that they do not exist....and milton friedman just died.

[catulle]

a free market guy.
but usually capitalists do their level best to try to block alternatives and justify higher short term profits in the immediate future ( see GM, Ford, Chrylser )... not much looking into the more distant future...and they also frequently do their level best to legislate and outlaw alternative products...( see the drug companies lobbying- paying off - congress to write a massive drug law that forbids the worlds largest drug purchaser from leveraging prices...or you could play the enron tapes during the california energy situation..the whole thing sold as a free market solution, dont worry, the market will take care of it.. ).
the trouble with free markets, centaur, is that they do not exist....and milton friedman just died.


Maybe we ought to join forces and get out of the house more often, atmo...? :D


(I agree 100%, though. Shortsightedness is a malady inherent in Capitalism and Democracy as we know them in our continent).

[Dekonick]

Now - this is the kind of response I was looking for!

I often worry about the future, but remember there will always be doomsday predictions. It is interesting to hear the point of view of a scientist v.s. ecomonist...

Fly - you have any thoughts?

Sandy?

Smiley?

I wonder just how smooth the transition will be. It will happen - it has to. The real question is when and how bad will it be?

In the mean time I am gonna buy up the world supply of tires and tubes before an innertube costs $865.10 :rolleyes:

[Simon Q]

I am afraid if we do not think long term and start changing and adapting things radically now it could be catastrophic. There are of course doomsayers but this is not Y2K. If we run low on oil we KNOW that there must be a fallout because we have become addicted to it. People in the US eat oranges from Spain and avacado from South Africa. Without oil to transport them that would not be possible. Globalisation depends on oil. How can countries or even regions within countries continue to specialise if you can't ship stuiff around in order to trade? Everything may have to be comminity based. And how will we replace plastics?

I don't have the answers of course but given that if we do nothing it will be a disaster and we show no signs of doing anything.

Not peak oil but shows how the world works, carbon emisssions per capita in the US under Bush have gone UP. Yes, UP. Kyoto? Who needs it? It might shave a whopping .05% off GDP growth. Australia are no better and there are countless otrhers. So don't assume that just becuase there hasn't been an upheaval like this before and that we are clever animals that the worst case cannot happen. Of course it can.

It is our cleverness operating in isolation without thinking about the wider picture or the longer term that has got us into this bind. So again, how clever are we really?

[Karin Kirk]

Actually some European countries have successfully lowered their carbon output with no obvious effects on thier economy. Even the in the US the rate of carbon output is actually leveling off a bit, although it's still climbing somewhat.

The age of gasoline so cheap we don't even think about it is probably already gone. IMHO, the transition will be painful, but there are a lot of ways the average Joe can save a lot of energy if compelled economically to do so. Do we reallt NEED avocados from South Africa? If they cost $20 each I would skip the guacamole and make bean dip instead.

In certain ways I look forward to such a transition, because finally people will really think about how much energy we use. But that's not to say it won't be a major shakeup for society.

[1centaur]

The capitalism of the already successful differs from the capitalism of the hungry wealth seekers. I fully agree that oil companies at some point would have incentives to block alternatives. I am hopeful that government will be wise enough to stop such actions from succeeding (or even to avoid consciously aiding the effort for the sake of lobbying dollars). The key difference between the coming age of alternatives and the Kyoto situation is that there is a huge ECONOMIC incentive for alternatives to succeed...at the right point. Both proponents AND consumers of alternatives will at some point benefit in the pocketbook from that success, which is not the case, except peripherally, from global warming initiatives. Allowing the profit motive to get the alternatives to market at the economically appropriate time is what I mean about letting capitalism work. Too many people confuse the collusion of big bureaucratic business with big bureaucratic government with capitalism. That collusion is an example of human nature, but capitalism is about the creative destruction of past practices that undermines our status quo instincts.

It has been shown time and again that government pushing agendas based on some justification of an economic nature leads to perverse consequences that were not foreseen. Years of tax incentives for solar devlopment (over 20 years so far) have done almost nothing but drain tax money that could have been either better spent or left in our pockets, because solar is not economically competitive (nor even close). A free market of companies/engineers/scientists WILL cut the effective cost of solar even as hydrocarbon cost increases. At the point of crossover or somewhat before (given the speculative nature of investment), solar will take off and sweep the world in a few short years for many applications, freeing up hydrocarbons for other uses. Attempts to speed that point by government dictate will cost us a lot now without good purpose. Nobody thinks oil will suddenly stop flowing - it will gradually decline and increase in expense (sometimes in spikes as in 2006, but gradually over years). The capitalist world is eager to finance alternatives that work (see the market cap history for Evergreen Solar as an example). I have no doubt the transition will occur MOSTLY when the prices make sense. BTW - we are not doing nothing now, there are lots of alternatives being worked on for profit and otherwise; there are lots of options AT A PRICE today. The inventors of alternative energy technology are not at all shortsighted - they are looking way into the future before they are competitive. Forcing alternatives into the market before they are price competitive, via government dictate, will SLOW development of better alternatives and effectively tax the populace significantly via higher energy prices vs. a probable 20 more years of lower-priced hydrocarbons. There are huge downsides to that - it would not be a free lunch (just to bring in Milton Friedman one more time).

[Erik.Lazdins]

It is interesting timing that this thread shows up with new lows of oil coming in place. If you consider that oil went from 78 to 55 in a few months, natgas from 15 last January to 3.85 during the Amaranth meltdown, I would expect that this is the new floor and oil/nat gas will find support here. Nat gas has nearly doubled since August and oil hasn't been lower in recent history - when will it go back up?

If you factor in India's and China's developement with regard to cars and oil consumption / increasing population / if we suspend thought about the supply side we can plainly see the demand is increasing and will continue to increase steadily.

The supply side is far more volatile - hurricaines / political unrest / more expensive methods of extraction to build proven reserves (jack2) tarsands etc. Huge reserves in Utah. When will Anwar be approved for drilling? Considering that most of the oil consumed domestically comes from countries that don't hold the US in the highest regard, the pressure to change laws and explore more domestically is rising quickly. Horizontal gas drilling, drilling for oil at 25,000 feet or deeper all increases the cost of the oil producer. The US may be able to lower the amount of oil we import, however this will come at a much higher cost.

When will oil / nat gas spike up again? Is this the last time we visit $55 oil? I still recall Forbes calling for $35 oil about 2 years ago. Is this still possible or has $55 become the new $35?

[1centaur]

The China point actually raises one more issue: The US might not have as high an incentive to go to alternatives as China over the next 10 years. China has huge monetary reserves and an incredible need to employ a workforce swelling as peasants move from rural areas to the oceans. They are making deals with Russia and South America and Africa for their energy needs today, but the political negatives of the Russia relationship in combination with the money stash and the employment problem might make giant windfarms or solar arrays an acceptable political choice as a make-work program, an inefficiency which their quickly growing economy could support without killing growth. It is a luxury to plan for the long term and China (and perhaps someday India) may have that luxury. If so, the peak oil issue becomes a more gradual problem for the rest of the world.

I'd say $50 is the new $35, but price decks change incredibly rapidly, so the level may not mean much. We have a recession coming up at some point, and if that coincides with a lot of supply from the oil sands and lots of new LNG sites in the U.S., for example, we may be surprised at how low oil can go in the short term. However, over the next decade we'll see a lot more of $100 oil than $40 oil, I'd guess. Oil sands work at $30 - Canada is going to have a very interesting economy.

[catulle]

Efficiency and effectiveness... :eek: